Evaluating health insurance plans can easily become a complicated task. Because everyone has different standards and expectations for the quality and price of a health plan, it can often be difficult to decide what's best for you. Luckily, there are a few universal factors that effect everyone's health plan costs.
Think Quality Before Cost
People will typically focus on price and getting the best deal for health insurance. While this is important, it may not be the best benchmark to base your decision on your health plan. It is better to first decide what quality of insurance you want and then question whether you are paying the right price for lat level of quality.
What Effects Premiums
Generally, insurance companies will base the monthly cost of your insurance (the premium) on the amount of financial risk (out-of-pocket expenses) you're willing to assume on medical expenses. The more risk you're willing to assume, the lower your premium will be. There are several factors that will dictate how much financial risk you're assuming on medical expenses.
The deductible is the out-of-pocket expenses that you pay before your insurance plan starts covering expenses. Generally, the higher your deductible, the lower your premium. Remember that you won't receive any support from your insurance plan until the deductible is paid in full; if you have a $4000 deductible and incur $3999 in medical expenses, you will have to pay those medical expenses in full, with your own money.
Health insurance deductibles generally renew each year. If you find that you typically don't have a high amount of medical expenses per year, you probably want a lower deductible and a higher premium. Otherwise you might as well not even have insurance because you will most likely be paying your deductible all year and won't experience many of the benefits of your plan.
Coinsurance describes the shared cost of medical expenses between you and your insurance company. This is essentially what you will pay for medical expenses once the insurance plan is in effect (meaning after you've paid the deductible). This is usually divided into percentages, most commonly 80% insurance, 20% you.
Let's say you have the $4000 deductible described above and an 80%/20% coinsurance payment plan, and you receive a $5000 medical bill. If this is your first medical bill of the year and your deductible is empty, you will pay the initial $4000 for the deductible plus $200, which is 20% of the remaining $1000 of the bill.
Your out-of-pocket maximum is the highest amount of medical expenses that your healthcare company requires you to pay. These expenses usually include your annual deductible, coinsurance, and copayments (fixed-dollar amounts that you pay each time for certain services like doctor's visits).
Once you reach this out-of-pocket maximum, your insurance company will cover 100% of the costs they consider to be medically necessary. Not all health plans include your deductible as an out-of-pocket expense, so be sure to look over the fine print of your plan. Each year, your out-of-pocket expenses renew just like your deductible, so keep that in mind.
In addition to these three main factors that effect your premium, there are plenty other factors that you and your insurance company will consider, such as maternity coverage, dental, paid doctors visits, and many more. Remember that the more services you accept for your insurance plan, the higher your premium will be, so only pay for services that you think you will need.